California Trendwatch: Polarizing jobs, polarizing regions

The Breakdown explains what's behind Southern California business and economic news. It describes the effects the headlines have on you: whether you're an investor, a business owner, an employee, homeowner, consumer or just someone who wants to know how to save a buck.

Earlier this week, the UCLA Anderson Forecast released a report on the national and state economy that contained a rather disturbing trend analysis. Since the financial crisis, two California economies have emerged. On the coast, there's growth. Inland, there's near-stagnation. You can easily see this expressed in the Los Angeles region's unemployment numbers. LA is bad, at at 12.7 percent. But Riverside and San Bernadino counties are far worse, at 15.1 and 14.3, respectively.

The industries that are creating jobs in California are also disproportionately located on the coast. Inland, the blast wave of the the housing bust is still being felt, with industries like construction shedding jobs.

One of the most worrisome trends for the long-term health of the American economy is the trend of polarization: the decline of middle skill, middle wage jobs in the U.S. Empirically, we now know that middle income work in the U.S. – and thus the middle class lifestyle that is the foundation of the American Dream – is being eroded. Since the 1980s, growth in the U.S. labor market has increasingly moved into high-skill jobs performed by well-educated workers and into low-skill jobs concentrated in service occupations, leaving behind the middle – those with more than a high school degree but less than a bachelor’s degree.

You can see where this is headed: In California we have a large inland region that endures stagnating economic growth and sees its workers lose access to a middle-class lifestyle. Maybe they don't fall into poverty. But they have to accept a new, reduced definition of what it means to be "middle class." At the same time, we see a well-educated coastal workforce reaping disproportionate gains and retaining a capacity for upward mobility.

We could accept a two-class society in California, but that's probably not a great idea. Instead, we could address the obvious problem, which is the lack of jobs for less-well-educated workers. I think we're going to need a two-piece solution: create higher-skilled jobs that require some training, but not necessarily a BA; and provide that training, by beefing up our educational system at that level.

It's clear that a lot of job growth in California is going to come in industries like science and technology. What we have to do to meet the challenge of polarization is encourage the development of businesses that provide scientific and technical services, but develop them in such a way that they need to hire workers who haven't been heavily educated. This is going to be tricky. But at least we have a rough idea of how depolarization can take place.